How William Morris/Silver Lake Won IMG

William Morris Endeavor’s co-chief executive Ari Emanuel, the mega-agent lionized in the HBO series Entourage, has long had a hand in the careers of many of Hollywood and music’s biggest stars, including Oprah Winfrey, Ben Affleck, and Snoop Dogg. Wednesday morning Mr. Emanuel added many of the world’s top models and athletes including Gisele Bundchen and Peyton and Eli Manning to his roster.

To expand his empire, Mr. Emmanuel and his private-equity backers at Silver Lake had to go big with their bidding. Here’s a look at how they jumped ahead of rival bidders to take over one of their key competitors – the talent and marketing agency IMG Worldwide. The buyout puts Mr. Emanuel and Patrick Whitesell, WME’s current co-CEOs, atop the largest talent agency in the world.

To land IMG, William Morris and Silver Lake outbid competitors by a relatively wide margin, ultimately coming in just below $2.4 billion, according to a person close to the deal. William Morris and Silver Lake did not publicly release the price or the terms of the deal.

The auction for IMG owned by the PE firm Forstmann Little was run by Evercore Partners and Morgan Stanley and was described by multiple participants as a robust one.

With PE firms as its final competitors for IMG, William Morris was able to find synergies that other final bidders, including CVC Capital Partners, could not. William Morris and Silver Lake pulled ahead by looking at the potential for aggressive cost cuts to the tune of $100 million per year, the person said.

By contrast, CVC’s bid came in around $2 billion, the person said. CVC only envisioned synergies between $30 million and $40 million. IMG’s employees were said to prefer anyone but William Morris and Silver Lake because of the expectations of massive cost cuts that could result in job losses at IMG. William Morris and Silver Lake are looking at ways to grow the company but also see duplicative high-level employees and other corporate overhead that could be easily cut, the person said.

Neither Mr. Emanuel not Mr. Whitesell are contributing equity to the deal, according to another person. Silver Lake, as a minority shareholder in WME, has never taken an active role in WME’s management and is expected to allow the new company to operate the same way, the person said. Still Silver Lake will have majority ownership of the new company.

The final bidders, one person said, were all willing to pay in the neighborhood 12 times the company’s $190 million in earnings before interest, tax, depreciation and amortization this year.

Silver Lake is expected to write a check for “several hundred million dollars,” according to this person. The new company will use the balance sheets of the combined WME-IMG to borrow money to finance the buyout. J.P. Morgan advised the winning buyer and will lead the financing.